Between 1999 and 2008, the returns on Microfund averaged 4% a year. In his 2008 discussion of performance, the fund president noted that this was nearly 6% a year better than the return on the U.S. market, a result that he attributed to the fund's strategy of buying only stocks with outstanding management.

The following table shows the returns on the market, the size and book-to-market factors, and the interest rate during this period:

The fund had marketed itself as a way to invest in small and medium-sized stocks, and this was reflected in a beta relative to the size factor of 1.1. It had also traditionally adopted a conservative approach to risk with an estimated market beta of .7. The fund's beta relative to the book-to-market factor was -.2. Evaluate the performance of the fund during this period.

Market Return on Returm on Book- Interest ReturnSize Factor to-Market FactorRate 4.7% 5.9 3.8 1999 2000 -17.5 2001 -15.2 2002 -22.8 2003 2004 2005 006 2007 2008-38.4 20.6% 15.3% 18.6 3.6 27.8 5.1 -2.3 0.3 -8.1 3.8 -34.2% 39.5 18.7 10.5 4.9 9.8 9.1 14.3 -12.2 30.8 10.7 3.1 10.6 1.1 1.0 1.2 3.0 4.8 4.7 1.6